The Securities Act of 1933 and the Securities Exchange Act of 1934 primarily regulates securities fraud, with the objective to ensure market competition by requiring full and fair disclosure of all material information in the marketplace. Criminal or civil liability may attach to securities fraud violations.
There are two main types of fraud which develop the basis for securities violations: material misrepresentations and/or omissions; and insider trading.
The most common securities fraud actions are material misrepresentations and/or omission in connection with the purchase or sale of securities.
Insider trading prohibits material, non-public information from being used to purchase or sell any security in breach of a fiduciary duty.
Recently, new areas have become sources of securities fraud law, including internet securities fraud, independence of brokerage analysts, and the backdating of executive stock options.
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